The DOW is down even as it got some good news.
US stocks mostly lower after manufacturing report
4 minutes ago
By MADLEN READ and SARA LEPRO
AP Business Writers
(AP:NEW YORK) Wall Street extended a monthlong slide Monday, largely shaking off a better-than-expected reading on manufacturing. Tech stocks outperformed the market, giving the Nasdaq composite index a slight gain.
The Institute for Supply Management said manufacturing activity rose during January from a record low, but still fell for the 12th straight month as the recession spread around the world. The trade group of purchasing executives said its widely-followed survey of manufacturing rose to 35.6 percent in January from 32.9 in December. That was well above the reading of 32.6 economists had expected.
"It's good that it came in better than expected, but it's not one of the key numbers," said Jim Herrick, director of equity trading at Baird & Co., referring to the manufacturing index.
The market was more concerned about a Commerce Department report that personal spending fell for the sixth straight month in December by 1 percent. Analysts had predicted a decline of 0.9 percent. Incomes also dipped, and the personal savings rate shot higher, a sign that consumers remain extremely nervous about the economy.
The department also said construction spending dropped by 1.4 percent in December, slightly worse than the 1.2 percent decline economists expected.
The major market indexes have fallen for four straight weeks on increasing pessimism about the economy, and the Dow Jones industrials and the Standard & Poor's 500 had their worst January ever.
The tech sector was the one bright spot on Monday. Gains in the sector helped to offset some of the losses in the broader market.
"Technology is one of the sectors that people, businesses are always going to need," said Keith Springer, president of Capital Financial Advisory Services. "There's a feeling that corporations are going to continue to invest in technology."
In midday trading, the Dow fell 68.34, or 0.85 percent, to 7,932.52, after earlier falling as much as 121 points. The Standard & Poor's 500 index fell 3.09, or 0.37 percent, to 822.79, and the Nasdaq rose 8.00, or 0.54 percent, to 1,484.42.
The Russell 2000 index of smaller companies rose 0.36, or 0.08 percent, to 443.89.
Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to 466.1 million shares.
As the economy deteriorates and consumers hunker down, investors are once again looking to Washington for help. But the market has been growing worried about government gridlock over a stimulus package for individuals and businesses.
The stimulus package that passed the House last week now goes to the Senate, where Republican leader Mitch McConnell said Sunday the bill backed by President Barack Obama and congressional Democrats could be defeated if it's not stripped of what Republicans deem unnecessary spending.
Investors are also concerned about the nation's ailing banks. So far, no "bad bank" plan has emerged from the White House. Such a plan would allow the government to take the riskiest assets off of banks' books and put them into a government-controlled entity.
Last week, the Dow closed down 0.90 percent, the S&P fell 0.70 percent, and the Nasdaq composite index lost 0.10 percent. Trading is likely to be fractious again this week as investors await the government's January jobs report, due Friday morning.
"The market doesn't like uncertainty," Herrick said. "Right now we're in a very uncertain time. Until we get some clarity on how deep this recession is, the market is going to be in a trading range."
Investors will also be looking to more corporate earnings reports for an indication of the economy's health. While there have been a few bright spots among the reports so far, the majority have been disappointing.
In earnings news Monday, toy maker Mattel Inc. said its fourth-quarter profit skidded 46 percent, well below analysts' estimates, as the recession curbed consumer spending.
Health insurer Humana Inc. reported that its fourth-quarter profit dropped 28 percent, driven by higher claim expenses from its stand-alone Medicare prescription drug plans and a plunge in its commercial business.
Mattel shares plunged $2.16, or 15.22 percent, to $12.03 Humana jumped $3.25, or 8.57 percent, to $41.18.
Among tech stocks, Microsoft Corp. rose 83 cents, or 4.9 percent, to $17.93, and Intel Corp. added 28 cents, or 2.2 percent, to $13.18. |
